View Full Version : Tax rate for LLC
07-27-2003, 09:53 PM
Can anyone tell me the tax rate for a LLC? I don't need a exact answer. If my company makes $150,000 in a year what is the estimated tax rate. 10%, 20%, 30%? I am considering expanding my business next year and was trying to figure out estiamted income and expenses. Thanks for your help. BTW I checked on the irs website and could not find it, at least not easily.
07-27-2003, 10:43 PM
Assuming you create a single-member LLC, all of your company's income would pass through to you as an individual. In other words, you would pay the same amount of income tax as you do right now. There is no separate corporate tax for LLC's.
A search of the Lawnsite will give you a quick start in learning more about this topic. Here are a few threads that will help you to learn more.
Thread 1. (http://www.lawnsite.com/showthread.php?s=&threadid=43856&highlight=llc)
Thread 2. (http://www.lawnsite.com/showthread.php?s=&threadid=39839&highlight=llc)
Thread 3. (http://www.lawnsite.com/showthread.php?s=&threadid=39134&highlight=llc)
Thread 4. (http://www.lawnsite.com/showthread.php?s=&threadid=37860&highlight=llc)
Thread 5. (http://www.lawnsite.com/showthread.php?threadid=37573)
Hope this helps.
07-28-2003, 09:58 AM
Okay, thanks. I am planning on having one employee next year, maybe two.
Green in Idaho
07-30-2003, 12:20 PM
Here is a link for the 2003 tax rates:
The 2003 rates are reasonable to use for your 2004, there will be some changes but probably not too dramatic, except for the millionaires of course....
r. it's 15% of your NET for self-employment tax PLUS the federal on the above linke PLUS your state income tax rates.
Having an employee doesn't matter on your tax rate. The wages simply reduce your net income and then the rate is applied.
I'm assuming the $150K is gross? Even at that it would be a good move to visit with an accountant (not a franchise tax preparer, an accountant) after this season to plan for next year- about November so you have time to take some actions before year-end.
07-30-2003, 11:55 PM
Green in Idaho -
Thanks for the information. It helped a lot.
08-06-2003, 10:56 PM
I had started a thread in this forum and I had listed the new tax rate table in comparison to last years. I have no clue how to insert that here. If you search, It is there. No more than 60 days ago.
Green in Idaho
08-07-2003, 01:06 AM
A1, Let me help you out:
And with that'
Can you tell me how the new tax law will change my effective tax rate and the actual dollar amount if:
1) My business produces $75,000 net
2) My salary is $40,000 and the rest ($25K) is C-Corp net profit.
3) Spouse takes 2,300 as health insurance premiums.
4) My office & shop is my home which I rent to the business for $1,000/mo
And considering the new dividend rates should I stay as a C-Corp or convert to an S? And if so what is the expected annual effect positive or negative if I switch????
You wrote, 'any questions feel free to ask"...
And will you (Block) guarantee that answer???
08-10-2003, 04:36 PM
I can only guarantee your return when I prepare it for a paying customer.
Ok business produces 75,000 net and you say you are a c corp.
your salary is $40,000, $35,000 goes to c- corp profit, and $12000 goes to you for rent of garage/shop.
The 35,000 profit would depend on what is done with it, dividends, bonus to CEO, retained. The 12,000 you effectively pay yourself would be reported on a E-1 Rental and Royalty which would then filter to your 1040. The spouse takes $2300 in insurance premiums. This part depends on if it is under a self employment plan, which could allow you certain credits and deduction, where a personal premium would be reported on your itemized deductions sch A.
An educated guess would mean that your income tax rate would be would be reduced from 27% to 25% . Your effective tax rate depends on credits among other things being that your effective tax rate by definition is a percetage of your income vs. actual tax paid.
If your taxable income is below $56,801, your tax rate does not change.
Hope this helps.
Why are you a C Corp to begin with ? And are there many shareholders? What do you have against " franchise tax preparers?". The computer programs used by Block make it pretty foolproof. Added to this, anything out of the ordinary needs to be checked by a senior preparer. We are all required to take a minimum amount of classes each year to get our jobs back.
Green in Idaho
08-10-2003, 06:08 PM
AI see Code Section 280A(c)(6) and the new rates for dividends. Would you answer differently after those?
I was hoping for a before and after summary, and some planning points...
Sorry about the typo 25 vs. 35.... :dizzy:
08-11-2003, 12:21 AM
You could pay as low as 5% on dividends depending.
Judging by the fact that you knew the code exactly, considering this was changed recently, I am assuming that you already know the answer to your question. Either you or someone close to you is a tax preparer of some kind. If you already have a pub 17 or RIA, let me know where I can get one. My class does not start for a few weeks.
As for the before and after summary, that depends on how everything breaks down( how much of the rental actually makes it from the E1 to the 1040, type of insurance premiums, how many children if any, etc. )
All things being equal if you end up with taxable income less than $56801, the rate stays the same whether it is 10% or 15%.
from $56801- $114650, your tax rate on your taxable income would drop from 27% to 25%.
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